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The number of homes entering into some stage of [tag]foreclosure[/tag] is surging, according to a survey released Wednesday. In August, 115,292 properties entered into foreclosure, according to RealtyTrac, an online marketplace for [tag]foreclosure sales[/tag]. That was 24 percent above the level in July and 53 percent higher than a year earlier. |
California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005. Rick Sharga, RealtyTrac’s vice president of marketing, says the rising foreclosure numbers are in part the result of rising monthly payments on adjustable-rate mortgages, which have a low introductory interest rate that heads higher after an initial period. “Usually, foreclosures are a lagging [market] indicator,” he says. “But we’ve never had a situation like this with adjustable-rate mortgages amounting to $400 billion to $500 billion coming up for adjustment over the rest of the year.” For a homeowner with a 5/1 ARM that’s now resetting, the adjustment could add at least two percentage points to the interest rate. That could send the payment on a $200,000 loan up from about $950 a month closer to $1,200 – $250 more each month.